This is my first post, though I have been using Dynare for years.
I am trying to study time-varying policy parameters using Ascari’s positive trend inflation model. I want to study this using both first and second order approximation.
If I solve this model by hand and simulate the code, even in the first order I find that this parameter to affect inflation and output and interest rates. Thus, my first order approximation by hand suggests this to be important.
I am now trying to replicate this result using Dynare. I have the excellent code available on the dynare user’s webpage. All I am doing is adding the time varying parameter but surprisingly this does not seem to be corroborating my results. I have little experience with non-linear models, but all I am doing is adding the time-varying parameter, thus the possibility of a coding error is minimal. Can anyone have a look at my code and advise? Cheers.
tor.mod (7.4 KB)